The Four Main Causes of Poverty in New Zealand

WELLINGTON — New Zealand, perhaps best known for its beautiful, sweeping landscapes featured in films like The Lord of the Rings and Hunt for the Wilderpeople, is a prosperous, first-world nation. And yet it is not immune to the issues of poverty that plague many such countries. As of 2010, an estimated fifteen percent of the population lives in poverty, and that number does not seem to have changed in the past seven years. In order to try to understand the complex reasons why this issue persists, here are a few of the causes of poverty in New Zealand:

1. Income equality.

Many nations with a healthy economy still struggle with poverty for this same reason: the wealthy control an excessive part of the country’s wealth, while the poor control little to none of it. Many people attribute this income equality gap to neo-liberal policies enacted by the New Zealand government in the 1980s. Economist Thomas Piketty explains that invested capital returns an average 3-5 percent a year, while economies rarely grow faster than 1.5 percent a year. This disparity results in a tightening of wages and an erosion of labor power.

He suggests that to correct this, it would be necessary to raise taxes for the wealthy. Because of these policies enacted in the 80s, inequality in New Zealand saw a spike from 1988 to 1992, and has continued to slowly rise since then, causing, essentially, the rich to become richer, and the poor to become poorer.

2. Lack of state support.

One of the other major causes of poverty in New Zealand also occurred between 1990 and 1992, during which time the New Zealand government cut back state support to families. A rise in child poverty in particular is attributed to this cut, as families with a lack of support are less likely to be able to afford proper education, food, and medical care for their children. Moreover, the benefit system is notoriously complex, and so it is difficult for many families to even know if they are eligible for certain benefits.

3. Inability to properly measure poverty.

To this day, New Zealand lacks an official measure of poverty, making it difficult for those in need of help to find it, or to know whether they qualify as “poor” in the first place. (The estimated fifteen percent of the population in poverty mentioned earlier was obtained using unofficial low-income thresholds).

4. A simple lack of funds.

This may sound obvious, but it is important to qualify that the main cause of poverty in New Zealand is a lack of money, not a lack of responsibility, laziness, or inability to work. Unfortunately, such social stigmas still exist, making it difficult or embarrassing for many people to take advantage of benefits they need. Employment alone is not enough to guarantee a healthy income, and living on benefits is not a long-term solution.

New Zealand suffers from many of the same systemic problems that other first-world countries, including the U.S., deal with to this day. And while many charities exist to help those in need, it will take a larger, governmental response in order for the causes of poverty in New Zealand to be truly addressed and fixed.